From Waste to Worth: How Carbon Credits Power the Composting Business Model
As global efforts to combat climate change accelerate, composting businesses are stepping into an increasingly important role—offering practical solutions for both waste management and greenhouse gas (GHG) reduction.
Organic waste accounts for a significant portion of municipal solid waste worldwide. When this material ends up in landfills, it decomposes anaerobically—without oxygen—releasing methane, a greenhouse gas more than 80 times more potent than carbon dioxide over a 20-year period. Composting offers a smarter alternative: by processing organic waste aerobically, it prevents methane emissions and produces a nutrient-rich soil amendment that supports soil health and sustainable agriculture.
In this context, composting is gaining momentum not just as an environmental solution, but as a compelling business opportunity. With landfills reaching capacity and climate concerns intensifying, the need to divert food scraps, soiled paper, and other organic waste from traditional disposal methods has become increasingly urgent—and now, it's also becoming economically viable.
As we’ll explore below, this transformation is opening the door to innovative revenue streams through carbon credits.
A Growing Market: Composting Industry Trends and Drivers
The global composting industry has experienced robust growth in recent years and is poised for continued expansion:
Market Size & Projections: The global compost market reached approximately $8.15 billion in 2024 and is projected to grow to $11.96 billion by 2029, reflecting a compound annual growth rate (CAGR) of 7.98%. Some forecasts are even more optimistic, estimating the market could reach $13.26 billion by 2029, with a CAGR of 10.6%. (Source: Compost Market Overview 2025)
Regional Dynamics: Asia Pacific currently leads the global market, accounting for over 35% of total value in 2024, followed by North America and Western Europe. Asia Pacific and Africa are expected to be the fastest-growing regions, with projected CAGRs of 9.36% and 9.00%, respectively, through 2029.
Application Segmentation: Agriculture remains both the largest and fastest-growing segment, accounting for more than 41% of the market in 2024 and expected to grow at a CAGR of 8.8% through 2029. (Source: Compost Industry Report 2025)
This quick expansion of the composting practices is driven by several factors:
Circular Economy & Sustainability: Increasing emphasis on circular economy practices, climate change mitigation, and corporate sustainability is boosting demand for composting solutions.
Soil Health & Organic Products: Heightened awareness of soil health and the disadvantages of chemical fertilizers is fueling demand for organic compost in agriculture and horticulture.
Urbanization & Waste Management: Growing urban populations are generating more organic waste, increasing the need for sustainable waste management and composting solutions.
Innovation & Technology: Advances in composting technologies (e.g., aerated static pile, in-vessel composting), compostable packaging, and waste-to-energy initiatives are enhancing efficiency and expanding market reach.
Government Support & Legislation: New regulations and infrastructure projects focused on waste reduction and cutting greenhouse gas emissions are creating supportive environments for composting businesses.
Despite its rapid growth, the composting industry continues to face economic hurdles. High upfront costs for infrastructure, equipment, and labor—combined with unpredictable demand for compost products—make profitability a persistent challenge.
Revenue Streams and Business Model of a Composting Facility
Composting facilities typically generate revenue through two main streams: inbound fees and sales of outbound products.
1. Inbound Revenue: Tipping and Collection Fees
Tipping Fees: Composting facilities charge waste generators—whether residential, commercial, or industrial—a fee for accepting organic waste. These fees are typically lower than landfill tipping fees to encourage participation.
Collection Fees: Some composting businesses also provide hauling services, generating additional income from the collection of organic waste.
Service Contracts: Facilities often secure long-term contracts with municipalities, businesses, or institutions to ensure a steady supply of organic material and predictable revenue.
2. Outbound Revenue: Compost and Value-Added Product Sales
Bulk Compost Sales: Finished compost is sold in bulk to farmers, landscapers, nurseries, and municipalities for use in agriculture or landscaping.
Bagged Compost and Potting Mix: Facilities can increase value by packaging compost or producing specialized blends for retail sale, such as potting mixes and soil amendments.
Secondary Markets: Lower-grade compost (commonly referred to as “overs”) can be sold for erosion control, vegetation establishment, or filtration applications—potentially increasing revenue by up to 30%.
Additional Revenue Opportunities: Carbon Credits
Beyond the inherent value of producing nutrient-rich compost, a growing number of composting businesses are tapping into a new revenue stream: carbon credits.
Composting significantly reduces methane emissions that would otherwise be generated in landfills. This methane avoidance can be quantified and verified using established methodologies, enabling facilities to generate carbon credits that can be sold on voluntary carbon markets.
Why Composting Qualifies for Carbon Credits
Composting facilities are eligible to generate carbon credits primarily due to their ability to avoid methane emissions by diverting organic waste from landfills, where it would otherwise decompose anaerobically. Although composting emits some CO₂ through aerobic decomposition, this is considered part of the natural carbon cycle and has far less global warming potential than methane.
Here’s how composting qualifies for carbon credits:
Methane Avoidance As the Core Benefit
Landfills are major sources of methane emissions. Since methane has 28 to 36 times the global warming potential of CO₂ over 100 years, avoiding its release results in significant GHG reductions—measured and credited in CO₂-equivalent (CO₂e) units.
Recognition in Carbon Credit Protocols
Leading carbon credit standards—including the Clean Development Mechanism’s AMS-III.F, Climate Action Reserve (CAR), and Verra—have formal methodologies for composting projects. These protocols quantify emission reductions by comparing methane emissions from a landfill baseline to the lower emissions from composting. Verified reductions are then issued as carbon credits.
Additional Soil Carbon Benefits
Beyond methane avoidance, applying compost to soils can enhance carbon sequestration, improving soil health and storing more carbon long-term. While this is a secondary benefit, it further strengthens composting’s climate value.
In summary, composting earns carbon credits because it prevents the formation of methane. This avoided methane is converted into verified CO₂e reductions under established carbon credit protocols, enabling composting projects to participate in carbon markets and monetize their environmental impact.
Case Study: Black Earth Organic Waste Composting Project by One Earth Fund Inc.
One standout example is the Black Earth Organic Waste Composting (OWC) initiative by One Earth Fund Inc. Operating across three facilities in Framingham, Groton, and Manchester-by-the-Sea, Massachusetts, the project processes up to 21 tons of organic waste daily. It leverages turned windrow composting with forced aeration, supported by high-efficiency operations, GPS-tracked logistics, and stringent data collection.
Key metrics from 2022–2023:
5,837.85 tCO₂e in verified emission reductions
~8,000 metric tons of food waste diverted from landfills annually
Full alignment with CAR OWC Protocol v1.1 and ISO 14064-2 standards
Conformance with Massachusetts waste regulations and voluntary composting criteria
The project is fully additional, as it targets food waste streams exempt from mandatory composting (i.e., generators under 1,000 lbs/week), with no grocery store waste included—ensuring it goes above and beyond existing laws.
Beyond emissions, the Black Earth OWC project drives multiple Sustainable Development Goals:
SDG 12: Reduces food waste
SDG 13: Mitigates climate emissions
SDG 8: Creates local green jobs
SDG 11: Advances sustainable city waste practices
Community engagement is ongoing and transparent, with monthly stakeholder consultations and no reported violations.
Carbonmark Direct: A New Path for Carbon Project Developers
Carbon credits from the Black Earth OWC project were issued via Carbonmark Direct, an integrated offering from Carbonmark that enables composting and other climate-positive projects to access carbon markets with ease and confidence.
Carbonmark Direct offers:
Seamless issuance and listing of carbon credits—within just two weeks of verification
Transparent pricing and tracking from issuance to retirement
No hidden fees or intermediaries
Access to global buyers through our open marketplace
For project developers with composting infrastructure, Carbonmark Direct lowers the barriers to market entry while enhancing visibility and trust with buyers.
By issuing credits directly through Carbonmark, projects like Black Earth OWC benefit from increased transparency, administrative efficiency, and streamlined access to climate-conscious purchasers. This direct model empowers developers to monetize verified emission reductions—unlocking a valuable new revenue stream for their composting operations.
The Future of Composting Is Carbon-Backed
At its core, composting is a simple yet powerful climate solution: transforming organic waste into a valuable soil amendment while significantly reducing greenhouse gas emissions. By integrating carbon credits into their financial models, composting businesses can scale faster, reinvest in infrastructure, and amplify their environmental impact.
The Black Earth project demonstrates that with the right partnerships, strong data integrity, and certifications, composting can go beyond waste diversion—it can become a thriving, mission-driven enterprise.
If you're a compost facility operator or climate project developer, Carbonmark Direct is ready to support your journey.
After all, there is no such thing as “waste” in nature—only untapped potential. By rethinking how we handle organic waste, we can turn yesterday’s scraps into today’s climate solutions and tomorrow’s business opportunities.
